UK businesses are increasingly turning to the Middle East as a prime investment destination, with interest in the region doubling in recent years, according to new research by Pagefield.
More than a third (36 percent) of UK business leaders now see the Middle East as a key investment hub for the next five years, up from just 18 percent who have previously invested there. Investors are eyeing the region’s economic reforms and strategic infrastructure projects as key drivers for their decisions.
This surge in interest comes at a time when the UK is seeking closer economic ties with Middle Eastern countries, particularly in the GCC region. UK Minister for Investment Baroness Poppy Gustafsson recently highlighted the ongoing negotiation regarding a free trade agreement with the GCC, noting that the negotiations have been progressing at pace and the two sides are having constructive discussions on goods, services and sustainable trade provisions.
It is estimated that the GCC-U.K. deal could increase bilateral trade by 16 percent, adding an extra $10.85 billion per year to trade between the U.K. and GCC countries in the long run. The U.K. and GCC’s bilateral trade currently amounts to around $72.41 billion.
Interest in Asia grows to 32 percent
Asia is also emerging as a hotspot, with interest rising from 22 percent to 32 percent as UK firms look to strengthen their global market presence. This interest from UK businesses is also driven by the region’s rapid economic growth and evolving trade partnerships.
“The sharp rise in interest in the Middle East and Asia signals a growing appetite for new, high-potential markets. Businesses are looking beyond traditional hubs and seeking opportunities in regions that offer both economic dynamism and strategic advantages,” stated Christopher Clark, partner at Pagefield.
Europe remains top choice among UK firms
Europe remains the top priority, with 55 percent of UK firms identifying it as their primary overseas investment destination. Investment in the U.S. remains steady, but new trade tariffs under President Trump’s administration pose uncertainty, potentially deterring future deals.
The research highlights the growing demand for government action to boost British investment overseas. Despite global economic and political headwinds, UK firms remain overwhelmingly bullish on Foreign Direct Investment (FDI), with 91 percent expressing confidence in cross-border expansion. This places UK businesses ahead of their U.S. counterparts, having committed to larger investments abroad in the past 12 months.
However, a striking 83 percent of UK firms say the government must do more to support international expansion, with nearly a third identifying Free Trade Agreements as the single most important mechanism.
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Tax incentives remain key to driving investment
Tax incentives are another key factor, with 19 percent of UK businesses emphasizing the role of enterprise zones and tax carve-outs in driving investment. Unsurprisingly, economic stability, workforce quality, and a strong commitment to equality, diversity and inclusion also rank high on the list of investment priorities.
“UK businesses are ready to invest overseas, but they need the right conditions to do so. The government should stand ready to support outward as well as inward investment, as it will strengthen UK businesses and the UK economy. Businesses are looking to the government to facilitate supply chains through free trade agreements and provide in-country support to boost business confidence,” stated John Alty, Pagefield senior advisor and former permanent secretary for the Department for International Trade (DIT).
